Franklin Templeton has reengineered two of its institutional money market funds to operate in tokenized finance and regulated stablecoin frameworks, instead of creating entirely new crypto products. This move allows the funds to function on blockchain platforms while staying fully compliant, offering institutional investors familiar cash-management tools that can now be used for on-chain liquidity and stablecoin reserve management.
In Brief
- •Franklin Templeton updated two money market funds to let institutional investors use traditional cash tools for on-chain liquidity and stablecoin reserves.
- •The Western Asset Institutional Treasury Reserves Fund supports secure on-chain transactions with faster settlement and round-the-clock accessibility.
Adapting Traditional Funds for Digital Finance
The updates focus on funds overseen by Franklin Templeton’s affiliate, Western Asset Management, enabling institutional clients to deploy their traditional money market instruments on digital finance platforms and within regulated stablecoin frameworks. The changes apply specifically to two Rule 2a-7 government money market funds, helping Western Asset continue supporting institutional clients and distribution partners as demand for digitally delivered financial products increases.
Among the funds, the Western Asset Institutional Treasury Obligations Fund ($LUIXX) has been redesigned to meet the requirements of the U.S. GENIUS Act, which became law last July and defines the assets eligible to back regulated stablecoins. The fund now invests only in short-term U.S. Treasury securities with maturities capped at 93 days, making it suitable for use as a stablecoin reserve.
Meanwhile, the Western Asset Institutional Treasury Reserves Fund ($DIGXX) has been redesigned for use through secure digital platforms. Approved partners can now register and transfer fund shares on-chain, supporting faster settlement times, round-the-clock transactions, and easier coordination with existing financial operations. Despite these technological enhancements, the fund continues to operate as a conventional money market vehicle.
Bridging Traditional Finance and Stablecoin Innovation
Reflecting this shift toward digital innovation, Roger Bayston, Franklin Templeton’s head of digital assets, highlighted that the firm anticipates stablecoin reserves will be handled in both tokenized and traditional forms. He also pointed to the increasing opportunities for institutions to manage these reserves either through a single entity or multiple entities as they roll out their own digital tokens.
Bayston also noted that major stablecoins tend to back their value with conventional, low-risk instruments instead of entirely digital-native setups, pointing to Wyoming’s FRNT stablecoin. Franklin Templeton aims to assist these initiatives by applying its investment know-how, helping connect traditional financial practices with new digital technologies.
The decision to retrofit existing funds was deliberate. Bayston described the changes as gradual, noting that Western Asset’s Treasury fund only required minor modifications to meet GENIUS Act standards and align with the firm’s on-chain offerings. With the groundwork in place, Franklin Templeton is making its new digital share class widely available through a network of approved partners, including banks, brokerages, and other intermediaries rolling out blockchain-based platforms, rather than linking it to a single system.
These updates follow a trend among major asset managers adapting to digital finance. JPMorgan recently launched a tokenized money market fund on Ethereum, while BlackRock revealed in October 2025 that it would adjust a Treasury money market fund to serve as an approved reserve for U.S. stablecoin issuers.